Businesses are doing their utmost to continue to operate normally during the COVID-19 pandemic. The restrictions on physical meetings, with many businesses now operating as much as possible remotely, raises the question of how to execute documents in these circumstances and whether it is possible to validly execute documents by electronic signature. Electronic signatures can be validly used in many circumstances.
What is an electronic signature?
An electronic signature or e-signature is “data in electronic form which is attached to, or logically associated with other data in electronic form and which is used by the signatory to sign”.
Irish law recognises simple electronic signatures such as a typed name on a signature block, or a facsimile or stamped signature, and advanced electronic signatures. Advanced electronic signatures are more digitally advanced e-signatures uniquely linked to the signatory, capable of identifying the signatory, are created using means that are capable of being maintained under the sole control of the signatory and are linked to the data signed so that any subsequent change is detectable. Although not commonly used in Ireland, Irish law also recognises qualified electronic signatures; these are e-signatures with additional security measures created by a qualified electronic signature creation device based on a qualified certificate (a certificate issued by a qualified trust service provider).
While an advanced or qualified e-signature has the benefit of being more secure and requiring less verification, any type of e-signature can, subject to practical considerations and certain exceptions, be used to execute many types of documents in Ireland.
When is the use of e-signatures not permitted?
E-signatures of any type cannot be used on certain categories of documents such as:
- statutory/sworn declarations and affidavits;
- wills; or
- any document which creates, acquires or disposes of an interest in real property.
In addition, certain registries, including the Companies Registration Office, the Property Registration Authority and the Intellectual Property Office of Ireland, require certain filings to be delivered as wet-ink originals.
Practical Considerations – When can I use an e-signature?
The appropriate method of execution of a document will depend on the circumstances. Each situation needs to be considered carefully to ensure that each document in your transaction is properly and validly executed. Even if an e-signature is a valid means of executing a document, there may be other factors that determine if it is appropriate to use an e-signature in the circumstances.
Relevant factors include the type of document that is to be signed or executed, the governing law of the document and cross border issues, the provisions of any applicable legislation, the constitution of the relevant party, as well as the requirements of any relevant registry.
Other practical issues include:
- Consent: For contracts, e-signatures may only be used where the other party to the contract consents to the use of an e-signature. Consent can be implied or inferred but ideally should be expressly provided for in the relevant document. Where the e-signature is to be given to a public body, different requirements may apply based on the “information technology and procedural requirements” of the public body.
- Documents under seal/Deeds: At the moment, it not possible to apply an electronic seal to a document in Ireland. Ideally, the directors or authorised signatories countersigning the affixing of a seal to a document should sign only with a wet ink signature. To avoid the difficulties of executing this way, a company could appoint an attorney to execute documents on its behalf.
- Witnessing: The execution of certain types of documents must be witnessed, such as deeds entered into by an individual. A witness must be physically present when the signatory applies their signature. The signature of this witness can be applied either as an e-signature or as a wet ink signature. Although it is preferable for a witness not to be connected to the signatory, such as a spouse or child, a witness does not have to be a disinterested party. A party to a document should not witness another party’s signature on that document. During the COVID-19 restrictions, those involved that need to be present, in this case, the witness and signatory, should comply with social distancing rules and any applicable quarantining restrictions.
- Virtual Execution: Where the parties to a transaction are not physically together and documents have to be executed virtually by e-mail, it is important to continue to comply with the Law Society of Ireland Guidance on “virtual execution” to ensure all documents are property and validly executed.
How can we help?
When executing documents, electronically or otherwise, company officers and authorised signatories must be fully aware of the relevant requirements for valid execution. During the COVID-19 pandemic, it is more important than ever to be aware of the opportunities and limitations when using e-signatures.
Please contact a member of the COVID-19 team or your usual William Fry contact if you have any questions about using e-signatures or remote closings
Contributed by: Kate Corcoran